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Q2 Earnings Season Preview

We have to wait another few weeks before the Q2 earnings season really takes the spotlight, but the reporting cycle has gotten underway, with results from 11 S&P 500 members already out. All of these early reporters, which includes major operators like FedEx (FDX - Free Report) , Oracle (ORCL - Free Report) and Adobe (ADBE - Free Report) and others, have fiscal quarters ending in May, but get counted as part of the June quarter tally. We have another 12 index members with fiscal quarters ending in May on deck to report results this week.

All in all, we will have seen Q2 results from almost two dozen S&P 500 members by the time JPMorgan (JPM - Free Report) , Wells Fargo (WFC - Free Report) and Citigroup (C - Free Report) (unofficially) kick-off this earnings season on July 14th.

The notable earnings reports coming out this week include:

Darden Restaurants (DRI - Free Report) reports on Tuesday (6/27) before the market’s open, with the company expected to earn $1.15 per share in earnings on $1.9 billion in revenues, which compares to $1.1 per share on $1.79 billion in revenues in the year-earlier period. The stock was up big following the last earnings report on March 27th and has been a strong performer since the August quarter release in October 2016. The stock is up +22.4% in the year-to-date period vs. +11.7% gain for the Zacks Restaurant industry and +9.2% gain for the S&P 500 index.

General Mills (GIS - Free Report) reports on Wednesday (6/28) morning, with the company expected to earn 71 cents per share on $3.75 billion in revenues, which compares to 66 cents in earnings on $3.93 billion in revenues in the year-earlier period. Estimates have come down a bit in recent days and the stock has lost ground following each of the last two earnings reports. The stock is currently down -9.5% in the year-to-date period vs. -3.7% decline for the peer group.

Nike (NKE - Free Report) reports after the market’s close on Thursday (6/29), with the company expected to earn 49 cents in EPS on $8.6 billion in revenues, which compares to unchanged EPS on $8.24 billion in revenues in the year-earlier period. This will be the fiscal fourth quarter for the company, with estimates for fiscal year 2018 steadily coming down over the last three months. The apparel and footwear space has been struggling lately as a result of headwinds in the broader retail space. The stock is up +4% in the year-to-date period vs. +3.1% gain for the Zacks Apparel & Footwear industry.

Micron Technology (MU - Free Report) will also report after the market’s close on Thursday (6/29), with the company expected to earn $1.37 per share in earnings on +5.4 billion in revenues. The year-over-year comparisons are very easy – the company had lost 8 cents in earnings on $2.9 billion in revenues in the year-earlier period. As is the case with most other semiconductors stocks, Micron shares have been standout performers lately, up +45% in the year-to-date period vs. +45.4% gain for the Zacks Semiconductor industry.

The chart below shows the weekly calendar of earnings releases for the entire Q2 earnings cycle. As you can see, we are about three weeks away from the reporting cycle really ramping up.

Expectations for Q2

Total Q2 earnings are expected to be up +5.8% from the same period last year on +4.6% higher revenues. This would follow +13.4% earnings growth in 2017 Q1 on +7.0%, the highest growth pace in all most two years.

Estimates for Q2 came down as the quarter unfolded, with the current +5.8% growth down from +7.9% at the end of March. The chart below shows how Q2 earnings growth expectations have evolved over the last three months.

Please note that while Q2 estimates have followed well traversed path that we have been seeing consistently over the last few years, the magnitude of negative revisions compared favorably to other periods. In other words, Q2 estimates have come down, but they haven’t come down by as much.

The table below shows the summary picture for Q2, contrasted with what was actually achieved in Q1.

The chart below shoes Q2 earnings growth expectations contrasted with what is expected in the following three quarters and actual results in the preceding 5 quarters. As you can see in the chart below, this growth pace is expected to continue through the rest of the year.

Scorecard for Early Q2 Results

As mentioned earlier, we have May quarter results from 11 S&P 500 members already. It is hard to draw any firm conclusions from the results thus far, but total earnings for these 11 index members are up +11.6% from the same period last year on +9.5% higher revenues, with 81.8% beating EPS estimates and an equivalent proportion beating revenue estimates.

The table below provides a summary view of the results that have come out already.

And here is our traditional scorecard table.

Note: Sheraz Mian manages the Zacks equity research department. He is an acknowledged earnings expert whose commentaries and analyses appear on Zacks.com and in the print and electronic media. His weekly earnings related articles include Earnings Trends and Earnings Preview. He manages the Zacks Top 10 and Focus List portfolios and writes the Weekly Market Analysis article for Zacks Premium subscribers.

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Company

Ticker

Current Qtr

Year-Ago Qtr

Last EPS Surprise %

Report Day

Time

SCHNITZER STEEL

SCHN

0.56

0.46

0.00%

Monday

BTO

NOVAGOLD RSRCS

NG

-0.03

-0.03

N/A

Monday

AMC

DARDEN RESTRNT

DRI

1.15

1.1

3.94%

Tuesday

BTO

IHS MARKIT LTD

INFO

0.43

N/A

-8.11%

Tuesday

BTO

FACTSET RESH

FDS

1.84

1.64

0.56%

Tuesday

BTO

KB HOME

KBH

0.26

0.17

7.14%

Tuesday

AMC

AEROVIRONMENT

AVAV

0.99

0.23

73.53%

Tuesday

AMC

CALAMP CORP

CAMP

0.22

0.27

-4.35%

Tuesday

AMC

MONSANTO CO-NEW

MON

1.74

2.17

15.58%

Wednesday

BTO

PAYCHEX INC

PAYX

0.53

0.49

1.85%

Wednesday

BTO

GENL MILLS

GIS

0.71

0.66

1.41%

Wednesday

BTO

UNIFIRST CORP

UNF

1.34

1.49

8.91%

Wednesday

BTO

OMNOVA SOLUTION

OMN

0.16

0.18

0.00%

Wednesday

BTO

SHAW COMMS-CL B

SJR

0.25

0.37

0.00%

Wednesday

BTO

WORTHINGTON IND

WOR

0.83

0.87

-17.91%

Wednesday

AMC

PIER 1 IMPORTS

PIR

-0.05

-0.07

3.03%

Wednesday

AMC

PROGRESS SOFTWA

PRGS

0.32

0.25

55.00%

Wednesday

AMC

SCHULMAN(A) INC

SHLM

0.65

0.79

3.33%

Wednesday

AMC

INVESTORS RL ES

IRET

0.1

0.14

-7.69%

Wednesday

AMC

CONSTELLATN BRD

STZ

1.98

1.54

8.03%

Thursday

BTO

MCCORMICK & CO

MKC

0.77

0.75

2.70%

Thursday

BTO

WALGREENS BAI

WBA

1.31

1.18

0.00%

Thursday

BTO

ACUITY BRANDS

AYI

1.92

1.96

-2.94%

Thursday

BTO

CONAGRA BRANDS

CAG

0.38

0.52

6.67%

Thursday

BTO

MICRON TECH

MU

1.37

-0.08

0.00%

Thursday

AMC

NIKE INC-B

NKE

0.49

0.49

30.77%

Thursday

AMC

GREENBRIER COS

GBX

0.83

1.12

29.76%

Thursday

BTO

GMS INC

GMS

0.46

0.53

0.00%

Thursday

BTO

LINDSAY CORP

LNN

0.92

0.9

23.68%

Thursday

BTO

RITE AID CORP

RAD

-0.02

0.01

100.00%

Thursday

BTO

US PHYSICAL THR

USPH

0.47

0.43

-6.12%

Thursday

BTO

8POINT3 ENERGY

CAFD

0.18

0.5

116.67%

Thursday

AMC

FRANKLIN COVEY

FC

-0.1

-0.07

22.73%

Thursday

AMC

EXFO INC

EXFO

0.03

0.02

0.00%

Thursday

AMC

AM OUTDOOR BRND

AOBC

0.38

0.66

22.22%

Thursday

AMC

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